Chuck D Is Suing Universal Music Group for "Hundreds of Millions..."Wednesday, November 02, 2011by paulAnd we thought Rick James was bringing the heat. On Wednesday, Chuck D filed a massiveclass action lawsuit against Universal Music Group, one loosely valued in the hundreds ofmillions. The suit, filed in the US District Court for Northern California, alleges that UMG ispaying a fraction of what is owed on various digital formats like downloads and ringtones, justlike the James lawsuit. "The exact amount... will be determined at trial, but which likely equatesto hundreds of millions of dollars if not more," the aggressive filing estimates.Chuck D attorneys Hausfeld LLP are putting out the call to "all Universal Music Group artists,"starting the wheels on a potentially monstrous class action. And this could be the beginning ofan anticipated flood of big-artist lawsuits, all based on the assertion that labels should becategorizing digital formats as licenses instead of sales. The former nets a far higher return - asmuch as 50 percent - while the latter delivers a more modest percentage.Obviously, D - whose government is Carlton Douglas Ridenhour - wants his famous releasesre-categorized as licenses, with appropriate back-payments attached. "As digital downloadshave emerged as the primary method by which many consumers acquire music, UMG hassystematically failed to pay appropriate royalties to musicians for these downloads," arguedJames Pizzirusso, a partner at Hausfeld involved in the case.A chunk of Ds recordings got roped into the UMG umbrella with the acquisition of Def JamRecordings in the 90s. Universal has promised to "vigorously defend" against the "flawed" case.The full filing is here. Wow, Rick James Is Really Sticking It to Universal Music...Wednesday, November 02, 2011by paulDont mess with Rick James, dead or alive! And on that note, a federal judge has just denied amotion by Universal Music Group to toss a class action royalty lawsuit driven by the Jamesestate. The decision means that UMG may still be forced to pay a sizable ransom on digitalformats for legacy artists.The James estate - with help from Rob Zombie - stamped this as a class action, meaningscores of other legacy artists can join. Separately, Chuck D has also started a similar classaction of his own, though it remains unclear if these actions will be consolidated. If triumphant,the James estate would get 50 percent of all digital payouts, instead of something closer to 12percent (or whatever the specific contract stipulates on sales). And, so would other artists inkedto UMG (and other majors, for that matter).This all started with Eminem publisher FBT Productions, who secured a serious victory in thisarea late last year. It may have been the trigger for an avalanche: back in April, the Jamesestate filed federal paperwork to recategorize all digital sales as licenses, instead of sales, andinvited others to join the fun. "If downloads are the way of the future, this is going to havemassive implications," attorney Gary Stiffelman of Ziffren, Brittenham LLP remarked after theinitial Eminem victory in the US 9th Circuit Court of Appeals.
Meanwhile, the judiciary climate now seems increasingly hostile towards major labels. Justrecently, older artists started circling the majors on termination rights, or clauses in contractsthat would return masters after a certain period of time. A full-blown court battle could endpoorly given the backdrop, and Congress is also taking notice.